What Happens If I Deposit a Check and It Bounces?

When a check you have deposited cannot be honored by the issuing bank, it is called a “bounced check.” This typically occurs because the check writer’s account lacks sufficient funds. Other reasons include errors, a closed account, or a stop payment order.

Understanding the Immediate Impact

When a check you deposited bounces, your bank will notify you, often through an email, app notification, or a physical letter. The notification details the check was returned unpaid. Your bank will then deduct the amount of the check from your account balance if the funds were initially made available to you.

You may also incur fees from your own bank due to the returned item. These “returned deposit fees” or “returned item fees” can range from approximately $10 to $20. If the deduction of the bounced check amount causes your account to go negative, you could face overdraft fees, which average around $27 to $35 per occurrence.

Actions to Take

Upon receiving notification that a deposited check has bounced, contacting the check writer is the immediate next step. Clearly explain the situation, including the amount of the check and any fees you may have incurred, and request immediate payment. It is helpful to discuss alternative payment methods, such as a direct transfer, money order, or cash, to avoid further issues.

If the check writer is unresponsive or unable to provide immediate payment, you might consider proposing a payment plan. If informal attempts to collect funds prove unsuccessful, sending a formal demand letter can be an effective next step. This letter officially notifies the check writer of the dishonored check and demands payment within a specified timeframe, typically ranging from 10 to 30 days. If all other efforts fail, pursuing the matter in small claims court is an option to recover the funds, though this process can vary in complexity and duration.

Consequences for the Check Issuer

The individual who wrote the bounced check faces several financial repercussions. Their bank will typically charge a non-sufficient funds (NSF) fee, also known as a returned item fee. These fees commonly average around $34 but can range from $20 to $50 per returned item.

Repeated instances of bounced checks can negatively impact the check writer’s banking relationship. Banks may flag accounts with frequent returned items, potentially leading to account closure. Information regarding mishandled accounts can be reported to consumer reporting agencies like ChexSystems. A negative ChexSystems report can remain on file for up to five years, making it difficult to open new bank accounts. Intentionally writing a bad check can also lead to civil penalties, where the check writer might be sued for the check amount plus additional damages. In severe or repeated instances, this could even lead to criminal charges, depending on the amount and intent.

Minimizing Future Occurrences

To reduce the likelihood of encountering bounced checks, consider requesting alternative payment methods for significant amounts, such as cashier’s checks, money orders, or direct electronic transfers. Promptly depositing any checks received also helps, as it reduces the time for account balance changes or other issues. Understanding your bank’s hold policies on deposited funds is also useful, as funds from checks may not be immediately available.

For those who write checks, maintaining a clear understanding of your account balance is important. Regularly monitoring your checking account activity and setting up low-balance alerts through online services or mobile app can help prevent accidental overdrafts. Establishing overdraft protection, which links your checking account to a savings account or line of credit, can provide a safety net by automatically transferring funds to cover transactions if your balance falls too low, though fees may apply.